Trading Update: Thursday February 23, 2023
Emini pre-open market analysis
Emini daily chart
- The Emini reached the bull trendline (October 13th, January 3rd) yesterday and found buyers.
- The bears got a breakout on February 21st with minimum follow-through yesterday, so bears likely disappointed.
- The follow-through is not ideal. It is a trading range bar that shows hesitation at the 4,000 big round number, which has been an important price level for the past year.
- There are targets below for the bears. However, the market is still in a likely trading range. Therefore, the bulls might get a bounce soon.
- Traders will pay close attention today to see how determined the bears are to continue selling. If the bears begin to hesitate and buy back shorts, bulls will buy aggressively, increasing the probability of the market testing the February 10th breakout point low before reaching the January 19th buy signal bar high.
- The market spent a couple of days going sideways at this price level (January 24th). That same price level is a magnet and will increase the odds of more sideways over the next couple of days.
- Overall, the odds favor the bears getting disappointed over the next day or two. The market likely continues to go sideways around the 4,000 big round number. The lower probability event would be a strong downside breakout.
Emini 5-minute chart and what to expect today
- Emini is up 12 points in the overnight Globex session.
- The Globex market has been going sideways for most of the overnight session.
- Traders should expect a lot of trading range trading today and for the bears to be disappointed on the daily chart.
- The daily chart is likely in a trading range. Trading ranges are notorious for causing disappointment after one side does something that looks strong such as the February 21st bear breakout.
- Traders should consider not trading for the first 6-12 bars unless they are comfortable with limit orders.
- Most traders should look for a swing trade on the open. The swing trade often happens after the formation of a double top/bottom or a wedge top/bottom.
- Overall, traders should assume today will try and close above the day’s open and disappoint the bears on the daily chart. This means that if a selloff on the open looks weak, traders will look to fade it.
Emini intraday market update
- The Emini Sold gapped up and went sideway for the first 12 bars.
- The bears got a downside breakout around 7:50 AM PT, and the market sold off to yesterday’s close.
- The selloff down to 9:00 AM PT is strong, which will increase the odds of sideways trading for the next couple of hours.
- The bulls will need to develop more buying pressure before they have a reasonable chance at reversing the selloff.
- The selloff down to 9:00 was climactic, which increases the odds of the market going sideways for a couple of hours and getting closer to the moving average.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is getting near the Higher Low Major Trend Reversal (HL MTR on the chart) target on the weekly chart. This target (1.0500) is important because the rally from October 2022 is the first major trendline break of the tight bear channel on the weekly that began in mid-2021.
- In general, higher low or lower high major trend reversals need at least a 30% pullback to make the higher low credible enough for a major trend reversal. The market does not have to stop at 1.0500. This price level is a minimum level bulls will want to see before buying.
- The January 6th low is another important price level that will likely be tested on the daily chart. If the bears can get below it, they can argue that the market is in a bear trend or a trading range. As long as the market is above the January 6th major higher low, traders can argue that the daily chart is still in a bull trend.
- The bears want to continue the tight channel that began after the February 6th bear breakout.
- The odds are that the first reversal up will be minor and lead to sideways trading. This means the bulls need to do something to undo the damage caused by the bears.
- The problem the bears have with the selloff over the past 12 bars is that the limit order bulls are making money below bars. If limit order traders are making money, eventually stop order bulls will begin to make money.
- Since the bears can argue that the market is in a tight bear channel, they want to get a downside breakout and trap the bulls scaling into longs building up a position. The bulls want an upside breakout and a test back to 1.080, which is most likely.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day review
- Live stream video trial replacement of end of day review coming soon
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Charts use Pacific Time
When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.